During the recession, and for years after, it was very difficult to get people to buy life insurance. Many felt they had more pressing financial needs. In addition, millennials, the largest population of adults by age group, long considered such coverages unnecessary.
However, things are changing: A large and growing amount of industry data shows that millennials are increasingly buying life insurance as they age, get married, start families, and so forth. As a result, the impact on the life market could be huge in the near future. In addition, polls generally show that people of all ages are seeing the value of life coverage even if they aren't buying it. With this in mind, it's important for the industry to consider whether making a switch to better cater to the needs of millennials makes sense.
What would that entail?
Even as life insurance purchases among young adults starts to pick up, there's still a lot of ground to make up before they match coverage rates of older generations when they were of a similar age, according to a report from Benefits Pro. Some data suggests that even at this point, an extremely small number of Americans between the ages of 18 and 34 have coverage, or can foresee a point at which they will actually buy it.
Life insurance companies are trying to reach millennials with marketing strategies and other types of outreach, such as seminars, the report said. However, a recent poll suggests that the vast majority of young people would rather do the research themselves, than work with an insurance agent or other financial professional to find the coverage that works best for them.
Striking a balance
This creates a few complications for life insurers, including the communication needed with the person buying the policy initially, the report said. This doesn't have to be done face to face, but an actual conversation rather than an email exchange goes a long way for insurers themselves.
For this reason and others, life insurance companies may have to simply do more to better connect with this youngest generation. The inherent value it provides to families, particularly young ones, can be substantial. Perhaps the biggest hurdle to clear is that millennials are the group most likely to overestimate the cost of such coverage, to the extent that they believe a policy would be twice as much as what it actually costs. Bridging that gap in particular could significantly bolster enrollment of young adults going forward.